FGV Annual Report 2016

FELDA GLOBAL VENTURES HOLDINGS BERHAD 176 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 2 BASIS OF PREPARATION (CONTINUED) (i) Change in accounting policy (continued) Under the revised accounting policy, bearer plants (both new planting and replanting) are accounted for in the same way as self-constructed items of property, plant and equipment. Expenditure on new planting and replanting of bearer plants are capitalised at cost and depreciated on a straight-line basis over the economic useful lives of 22 years for oil palm trees and 20 years for rubber trees from date of maturity or, the remaining period of the land lease, whichever is shorter. Bearer plants are classified as property, plant and equipment. The bearer plants are assessed for indicator of impairment, and if indication exists, an impairment test is performed in accordance with FRS 136 – "Impairment of Assets". Forest and livestock which do not meet the definition of bearer plants continue to be presented as biological assets (see Note 3(m)). The revised accounting policy will result in the financial statements reflecting more fairly the Group's financial position and financial performance. The carrying amount of bearer plants will be more reflective of the cost incurred whilst the depreciation of the bearer plants over their useful lives will reflect the consumption of the bearer plants' future economic benefits. The new accounting policy is also more aligned with the underlying principle in the revised standard, Agriculture: Bearer Plants (Amendments to MFRS 116 – "Property, Plant and Equipment" and MFRS 141 – "Agriculture") issued under the Malaysian Financial Reporting Standards Framework (MFRS Framework) (see Note 2(iii)). The change in the accounting policy has been applied retrospectively and the impact on the current year and the comparative figures are disclosed in Note 58. (ii) Accounting pronouncements that are effective and have been adopted by the Group and the Company as at 1 January 2016: • Amendments to FRS 11 "Joint Arrangements" - Accounting for Acquisition of Interests in Joint Operations • Amendments to FRS 101 "Presentation of Financial Statements" - Disclosure Initiative • Amendments to FRS 127 "Separate Financial Statements" - Equity Method in Separate Financial Statements • Amendments to FRS 10 "Consolidated Financial Statements", FRS 12 "Disclosures of Interests inOther Entities" and FRS 128 "Investments in Associates and Joint Ventures" - Investment Entities: Applying the Consolidation Exception • Amendments to FRS 116 "Property, Plant and Equipment" and FRS 138 "Intangible Assets" - Clarification of Acceptable Methods of Depreciation and Amortisation • Annual Improvements to FRS 2012 – 2014 Cycle (Amendments to FRS 5 "Non-current Assets Held for Sale and Discontinued Operations", FRS 7 "Financial Instruments: Disclosures", FRS 119 "Employee Benefits" and FRS 134 "Interim Financial Reporting") The adoption of the above amendments to existing standards did not have any significant impact on the financial statements of the Group and Company. (iii) Accounting pronouncements that are not yet effective and have not been early adopted by the Group and the Company: Effective for annual periods beginning on or after 1 January 2017 with earlier application permitted • Amendments to FRS 107 "Statement of Cash Flows" - Disclosure Initiative • Amendments to FRS 112 "Income Taxes" - Recognition of Deferred Tax Assets for Unrealised Losses • Annual Improvements to FRS 12 "Disclosures of Interests in Other Entities"